November 11, 2020
For every business, whether it is a start-up, SME or a Chartered Accountant firm, bookkeeping and accounting are very essential functions. If your books of accounts and financial documents are accurate, they help you in making quick decisions for the organization’s growth. There are two ways to get there. Either you hire full-time In-house accountants or outsource your accounting work to an outsourced accounting firm.
There is an obvious benefit of having full control when you choose to hire an in-house accountant but there are more pros than cons when you decide to outsource accounting services to outsourced accounting firms. Let us look at some of the usual problems faced by CA firms who hire in-house accountants and how they can overcome the same when they outsource their work to an outsourced accounting firm.
1. Hiring and Training
A lot of time and effort is spent in recruiting a new employee. It is a burden on a firm’s resources to post a new job opening, interview candidates, recruit them and then train them on systems and procedures. On the other hand, when you choose an outsourced team of accountants, you don’t need to worry about hiring or training. Proven manpower and systems are already in place. This will boost productivity and turnaround time.
It is more expensive to have an in-house accounting team. You have to pay for their salary and also for other overhead expenses such as medical insurance, paid holidays, NI contribution, holiday pay, office space rent, computer and office equipment, training costs, etc.
While when you pick an outsourced accounting team you don't require to pay all the other expenses. Also, when you hire a full-time employee, you are liable to pay him/her a full-time salary. Whereas with an outsourced team, you can pay only for the services that you hire them for and for the exact type of work that they do for you. This way you will save precious pounds as you are not paying for the time and services that you don’t require every month.
In-house employees are expected to be productive throughout the day. But the reality is otherwise, water-cooler conversations, break time gossips and chit chats are bound to happen, which means that you are paying your employees even when they are not choosing to be productive. Also, when an in-house employee is not well or goes on a vacation then you are left in a lurch without a financial expert to offer you professional advice. On the other hand, outsourced accountants offer you a team of experts who are there to help you round the clock 24x7. Also, they charge you only for the billable time spent doing the work, so there is no need to worry about unnecessary costs for non-productive time.
4. Quality Of Work
Accounting and bookkeeping are complex tasks. The in-house accountant needs to stay up-to-date with new skills, changing UK accountancy and taxation norms, HMRC rules and regulations, new software etc. A couple of in-house accountants won’t be able to manage all these and so you may end up facing quality issues or even costly mistakes, which would be detrimental to your business. Also, it would be impossible to train your in-house staff in-depth and across various functions. Bookkeeping outsourcing or accounting outsourcing will offer you a team of experts who are always up-to-date in all the aforementioned domains.
5. Workload Issues
In-house accountants normally face workload issues. During the slack season, there is hardly any work which means that a lot of paid hours go to waste during the week. Hence, what you need is an accounting service that can adjust to the needs of your company and that is why it is highly imperative and beneficial to acquire services of an outsourced accounting team that can keep pace as your business grows in the future.
You may be surprised to know this, but the fact is in-house accountant/s are more likely to commit fraud. The simple reason being the amount of inside information they are aware of and hence would be tempted to ‘cook the books’ or embezzle money. An outsourced accounting firm won’t have access to such confidential information. A remedy to this is segregation of duties, but this is not possible when you have one or a very small team of in-house employees. Hence, the best alternative is to consult an outsourced firm having proactive checks and balances. Also, an outsourced accounting firm would never indulge in any act of impropriety as their reputation in the industry would be at stake.
There are various important benefits you can get when you leverage the skills, expertise, and experience of accounting experts at your outsourcing partner’s company. They help you in running your business operations profitably & smoothly as they will take care of your accounting and finance in a fair and well-organized way by reducing your tax burden and provides accounting services with a personal touch.